Our overarching narrative for this Outlook, as laid out in our recent Global Themes publication (Figure 2), is the impact of DM monetary policy normalization, which is generally gaining momentum (with some exceptions), on countries’ macro fundamentals.
The withdrawal of easy money will risk undermining resilience to shocks and dragging on growth. Although we expect the environment of steady growth to continue, normalization implies a chance that policy mistakes could deflate ballooning asset prices.
Certain countries will be particularly vulnerable to policy shocks, and to the political shocks that we should also be wary of. In Figure 3, we outline the key upcoming events and critical uncertainties.
Market implications: As discussed in detail in our expanded Markets section (featuring separate chapters on DM Rates, DM FX, Credit, EM FX and Debt, Equities and Commodities)
